South Africa’s cash-strapped state power utility Eskom said on Friday it had signed a US$100 million (approximately R1.35 billion) loan facility with German development bank KfW to support further investments in the transmission network in the Northern Cape province to facilitate the grid integration of renewable energy independent power producer projects.
Eskom said the funding, agreed upon by the German and South African governments, would allow for the continuation of the second phase of capacity and reliability improvements in the areas of Harrismith in Free State province and the Greater East London region in the Eastern Cape.
“The signing of this loan facility is a positive contribution towards the successful execution of Eskom’s R72 billion funding requirement for the financial year 2018/19,” the electricity company said.
“The loan forms part of the first new funding that Eskom intends signing with developing finance institutions in this financial year.”
It said the loan facility demonstrated the improved market sentiment and confidence in the ability of the Eskom’s leadership to direct the company on the correct path to recovery and sustainability.
“Furthermore, integrating more renewable sources of energy into the grid will go a long way in helping to reduce South Africa’s CO2 emissions, driving Eskom towards its targeted goals,” CEO Phakamani Hadebe said.
With the introduction of South Africa’s Renewable Energy Independent Power Producer Procurement Programme (REIPPP), KfW extended a R3.9 billion loan to Eskom in March 2015 to facilitate renewable energy grid integration and to strengthen the grid by improving the capacity and reliability of the transmission network.
KfW is one of the world’s leading and promotional banks, in which the German federal government has an 80 percent stake, while federal states own 20 percent.